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Test your basic knowledge |
AP Microeconomics
Start Test
Study First
Subjects
:
economics
,
ap
Instructions:
Answer 50 questions in 15 minutes.
If you are not ready to take this test, you can
study here
.
Match each statement with the correct term.
Don't refresh. All questions and answers are randomly picked and ordered every time you load a test.
This is a study tool. The 3 wrong answers for each question are randomly chosen from answers to other questions. So, you might find at times the answers obvious, but you will see it re-enforces your understanding as you take the test each time.
1. Models where firms agree to mutually improve their situation
Collusive oligopoly
Negative externality
Fixed inputs
Marginal tax rate
2. Entry of new firms shifts the cost curves for all firms upward
Normal Profit
Increasing Cost Industry
Utility Maximizing Rule
Resources
3. Entry (or exit) of firms does not shift the cost curves of firms in the industry
Free-Rider Problem
Consumer surplus
Excess Capacity
Constant cost industry
4. For one good - constrained by prices and income - a consumer stops consuming a good when the price paid for the next unit is equal to the marginal benefit received
Marginal Revenue Product (MRP)
Marginal Product of Labor (MPL)
Total Welfare
Constrained Utility Maximization
5. The most desirable alternative given up as the result of a decision
Cross-Price Elasticity of Demand
Opportunity Cost
Profit Maximizing Resource Employment
Monopolistic competition long-run equilibrium
6. Entry of new firms shifts the cost curves for all firms downward
Decreasing Cost industry
Inferior Goods
Marginal Productivity Theory
Natural Monopoly
7. Product demand - productivity - prices of other resources - and complementary resources
Marginal Cost (MC)
Determinants of Labor Demand
Variable inputs
Decreasing Cost industry
8. The case where economies of scale are so extensive that it is less costly for one firm to supply the entire range of demand
Price Elasticity of Supply
Shutdown Point
Natural Monopoly
Monopsonist
9. The additional benefit received from the consumption of the next unit of a good or service
Average Fixed Cost (AFC)
Subsidy
Monopoly
Marginal Benefit (MB)
10. Ed = 8 - infinite change in demand to price change
Profit Maximizing Resource Employment
Excise Tax
Consumer surplus
Perfectly elastic
11. Costs that change with the level of output. If output is zero - so are TVCs.
Monopoly long-run equilibrium
Total variable costs (TVC)
Constant Returns to Scale
Market Economy (Capitalism)
12. Exists if a producer can produce more of a good than all other producers
Law of Increasing Costs
Determinants of Labor Demand
Absolute Advantage
Explicit costs
13. The least competitive market structure - characterized by a single producer - with no close substitutes - barriers to entry - and price making power
Private goods
Monopoly
Allocative Efficiency
Natural Monopoly
14. The difference between total revenue and total explicit and implicit costs
Average Product of Labor (APL)
Perfect competition
Determinants of Supply
Economic Profit
15. The downward part of the LRAC curve where LRAC falls as plan size increases. This is the result of specialization - lower cost of inputs - or other efficiencies of larger scale.
Constant cost industry
Natural Monopoly
Marginal Revenue Product (MRP)
Economies of Scale
16. The more of a good that is produced - the greater the opportunity cost of producing the next unit of that good
Marginal Revenue Product (MRP)
Producer surplus
Long Run
Law of Increasing Costs
17. The lost net benefit to society caused by a movement away from the competitive market equilibrium
Producer surplus
Economic Profit
Law of Increasing Costs
Dead Weight Loss
18. Exists if a producer can produce a good at lower opportunity cost than all other producers
Determinants of Supply
Economics
Monopoly
Comparative Advantage
19. The practice of selling essentially the same good to different groups of consumers at different prices
Inferior Goods
Producer surplus
Price Elasticity of Supply
Price discrimination
20. Production inputs that the firm can adjust in the short run to meet changes in demand for their output. Often this is labor and/or raw materials
Substitution Effect
Variable inputs
Four-firm concentration ratio
Comparative Advantage
21. Production of the combination of goods and services that provides the most net benefit to society. The optimal quantity of a good is achieved when the MB = MC of the next unit and only occurs at one point on the PPF
Allocative Efficiency
Excise Tax
Price elastic demand
Perfectly elastic
22. Has opposite effect of an excise tax - as it lowers the marginal cost of production - forcing the supply curve down
Subsidy
Substitution Effect
Price elasticity
Absolute Advantage
23. A market structure characterized by a few small firms producing a differentiated product with easy entry into the market
Income Effect
Monopolistic competition
Resources
Law of Increasing Costs
24. Indirect - non-purchased - or opportunity costs of resources provided by the entrepreneur
Economics
Determinants of elasticity
Implicit costs
Perfect competition
25. The rational decision maker chooses an action if MB = MC
Excess Capacity
Marginal Analysis
Marginal Benefit (MB)
Specialization
26. AVC = TVC/Q
Average Variable Cost (AVC)
Marginal Analysis
Excess Capacity
Shortage
27. A period of time too short to change the size of the plant - but many other - more variable resources can be changed to meet demand
Monopolistic competition long-run equilibrium
Short run
Break-even Point
Average Fixed Cost (AFC)
28. Goods that are both rival and excludable. Only one person can consume the good at a time and consumers who do not pay for the good are excluded from consumption
Market power
Private goods
Oligopoly
Economic Growth
29. Holding all else equal - when the price of a good rises - suppliers increase their quantity supplied for that good
Economies of Scale
Fixed inputs
Negative externality
Law of Supply
30. The total quantity - or total output of a good produced at each quantity of labor employed
Resources
Law of Demand
Inferior Goods
Total Product of Labor (TPL)
31. The philosophy that a citizen should receive a share of economic resources proportional to the marginal revenue product of his or her productivity
Market power
Marginal Productivity Theory
Absolute Advantage
Total variable costs (TVC)
32. The additional cost incurred from the consumption of the next unit of a good or a service
Total Revenue Test
Monopsonist
Marginal Cost (MC)
Implicit costs
33. Costs of inputs - technology and productivity - taxes/subsidies - producer speculation - price of other goods that could be produced - and number of sellers all influence supply
Marginal Revenue Product (MRP)
Fixed inputs
Determinants of Supply
Price Ceiling
34. 0 < Ei < 1
Constant Returns to Scale
Scarcity
Necessity
Total Revenue
35. A good for which higher income increases demand
Normal Profit
Normal Goods
Average Variable Cost (AVC)
Economies of Scale
36. Ed = 0 - no response to price change
Absolute prices
Perfectly inelastic
Cross-Price Elasticity of Demand
Price inelastic demand
37. ATC = TC/Q = AFC + AVC
Average Total Cost (ATC)
Accounting Profit
Income Effect
Private goods
38. The imbalance between limited productive resources and unlimited human wants
Total Welfare
Production function
Scarcity
Law of Diminishing Marginal Utility
39. The rate paid on the last dollar earned. This is found by taking the ratio of the change in taxes divided by the change in income
Dead Weight Loss
Complementary Goods
Spillover benefits
Marginal tax rate
40. A group of firms that agree not to compete with each other on the basis of price - production - or other competitive dimensions. Cartel members operate as a monopolist to maximize their joint profits
Necessity
Cartel
Demand for Labor
Total variable costs (TVC)
41. The difference between the price received and the marginal cost of producing the good. It is the area above the supply curve and under the price
Producer surplus
Monopolistic competition
Price elasticity
Production function
42. The difference between your willingness to pay and the price you actually pay. It is the area below the demand curve and above the price
Perfectly inelastic
Consumer surplus
Profit Maximizing Resource Employment
Accounting Profit
43. Additional costs to society not captured by the market supply curve from the production of a good - result in a price that is too low and a market quantity that is too high. Resources are overallocated to the production of this good
Determinants of Demand
Economic Growth
Subsidy
Spillover costs
44. A firm that has market power in the factor market (a wage-setter)
Monopsonist
Law of Diminishing Marginal Utility
Economies of Scale
Economic Growth
45. Excess supply; exists at a market price when the quantity supplied exceeds the quantity demanded.
Surplus
Profit Maximizing Rule
Market Equilibrium
Perfectly inelastic
46. Substitutes - cost as percentage of income - and time to adjust to price changes all influence price elasticity
Law of Demand
Determinants of elasticity
Perfectly inelastic
Explicit costs
47. Labor demand for the firm is MRPL curve. The labor demanded for the entire market DL = ?MRPL of all firms
Perfectly inelastic
Total variable costs (TVC)
Demand for Labor
Decreasing Cost industry
48. Ed < 1
Shutdown Point
Specialization
Shortage
Price inelastic demand
49. A legal minimum price below which the product cannot be sold. If a floor is installed at some level above the equilibrium price - it creates a permanent surplus
Average Product of Labor (APL)
Average Variable Cost (AVC)
Positive externality
Price floor
50. When firms focus their resources on production of goods for which they have comparative advantage
Market Economy (Capitalism)
Average Fixed Cost (AFC)
Specialization
Total Revenue Test